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Old 05-17-2011, 10:18 AM   #73
rogue
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Quote:
Originally Posted by severe View Post
When there isn't 'enough' dollars the fed and other banks are able to inject more into the system thus devaluing all other dollars. Bitcoins could be divided into smaller fractional units forever.

One problem I see with the limited amount of available bitcoins is interest. If you charge interest on a limited currency eventually a few individuals will be able to amass most of that currency so long as they don't spend it, which is why usury was a sin at one point in our history.

With government currency that problem is largely solved by banks by creating more currency through debt to outpace interest.

It's based on the currency exchange trading. It's what people are actually paying to buy bitcoins. I have not figured out why anyone would buy bitcoins, other than for speculation though. Really the dollar and fiat currency doesn't have an intrinsic value either, it only works because it's acceptance is forced through law.
How do you divide a bitcoin into fractions? I'm still waiting to see this part.

It looks like right now bitcoins are just an intermediary for other currencies. Similar to paypal or any other electronic transaction, the bitcoins are only of value because someone is willing to pay you for them later. If that interest were to dry up (which would take nothing more than people changing their minds or becoming bored) then they'd lose value.
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